Metro News & Reviews

China Fast Forward?

A recent article in the Los Angeles Times reports that Mayor Antonio Villaraigosa and a representative from Metro had a “very preliminary” discussion with Chinese officials about the possibility of China making an investment in transit in Los Angeles. I considered this idea in a piece back in July 2010 in the Huffington Post.

With Congress seemingly stuck in a different gear on the America Fast Forward concept that grew out of the homegrown 30/10 Initiative, the Mayor said that he feels it is important to leave no funding option unexplored, including looking beyond Washington to the Chinese, to fund the critical transit projects that he hopes to get built in the years, rather than the decades to come.

My 2010 piece cited a post by Yonah Freemark in his Transport Politic blog explaining that “the Chinese government has agreed to a $10 billion commitment to upgrade a series of intercity rail lines in Argentina and improve urban transit systems in Buenos Aires and Cordoba.”

The 2010 Transport Politic article also noted that not only is China willing and able to contribute its national funds to foreign projects, but also that it intends to structure its investments as an alternative to the World Bank. In March 2010 China had announced a series of investments in high-speed rail throughout Asia and Europe.

China’s transportation investment in Argentina included $4.35 billion toward the renovation of three freight train lines to carry agricultural products to ports for export (to China), as well as over four billion dollars towards the improvement of the Buenos Aires subway and construction of a metro in Cordoba. As Freemark’s article notes, the urban projects seemingly offer no clear economic benefit to the Chinese. The quid pro quo of the overall deal is instead preferential trade treatment for China (including its rail expertise and equipment) as well as improved access to Argentina’s agricultural products. From an earlier career with one of California’s largest agricultural producers, I have seen more than a few products grown in the Central Valley selling well in Beijing and Shanghai.

There is a larger picture here: With public funds in very short supply, many transit agencies and advocates in recent years have touted the benefits of public-private partnerships in which private capital is used to help build or operate transit. Of course, that private money usually gets something in return, whether it be operating revenues or construction contracts likely to yield a return in investment.

At this point, it is important to stress that there is no potential deal on the table concerning Metro and any private investor. In the case of a foreign investor, there would obviously be a slew of questions that need to be answered — in particular about jobs and the origin of equipment and technology used on the to-be-built projects.